Economic Update: 10-04-2014

Hiring Surge Pushes U.S. Jobless Rate to Six-Year Low. We kicked off October with great jobs news, initial jobless claims that have fallen to pre-recession levels. The September Job report was released today, a powerful surge in hiring pushed unemployment to a six-year low of 5.9 percent in September as the U.S. labor market showed renewed vigor. The unemployment rate fell to 5.9% from 6.1%, lowest since July 2008, the Labor Department said Friday.

The 248,000 gain in payrolls followed an 180,000 increase in August that was bigger than previously estimated, the Labor Department reported in Washington. Revisions boosted the job count by 69,000 over the previous two months. The jobless rate fell from 6.1 percent to the lowest level since July 2008. Private employers added 213,000 jobs in September, payroll processor ADP released. Economists had estimated that ADP would report 207,000 private-sector job additions. They predicted the Labor Department’s report Friday would show 215,000 payroll gains by businesses and governments, this month’s numbers surpassed predictions for the second month in a row. Trade, transportation and utilities led the job gains, with 38,000. Manufacturers added 35,000, and professional and business services, 29,000.

The pickup in hiring shows employers are gaining confidence the expansion in the world’s biggest economy will be sustained, surviving slowdowns in Europe and Asia that have hurt global stock markets. Stagnant wage growth kept the report from being universally upbeat, giving Federal Reserve policy maker’s reason to be patient in removing monetary stimulus.

The report today showed the U.S. trade deficit shrank in August to the lowest level in seven months as exports edged up to a record. The gap decreased 0.5 percent to $40.1 billion, the smallest since January, from $40.3 billion in July, the Commerce Department reported.

The narrowing deficit prompted economists at Barclays PLC in New York to boost their tracking estimate of third-quarter gross domestic product to a 3.3 percent gain at an annualized rate from 2.7 percent.

The stock market had a rocky start this week with fears that Ebola could impact US economy. U.S. equities had fallen sharply into negative territory Wednesday as investors fret over mixed economic data, unrest in Hong Kong and the first diagnosed Ebola case in the U.S. Among the most notable losers are the airlines: United Airlines, Delta Airlines and American Airlines were all down 2.7% or more on fears that the first diagnosed Ebola case in the U.S. will lead to fewer consumers wanting to travel.

Toward the end of the week, stocks quickly ticked up as fears settled and with the positive unemployment data released Friday. The stock market staged a strong rally Friday — with the Dow up more than 200 points back above the 17,000 level — after the government’s monthly employment report showed a rebounding jobs market.

U.S. stocks surged on Friday, with the Dow industrials jumping 200-plus points, after a better-than-projected payrolls report bolstered a positive view of the U.S. economy.

The Dow Jones industrial average added 208.64 points, 1.2%, to end at 17,009.69. The Standard & Poor’s 500 index gained 21.73 points, 1.1%, to finish at 1967.90. The tech-laden Nasdaq composite index rose 45.43 points, 1%, to close at 4475.62.

The rally extended an impressive turnaround that started midday Thursday, when the Dow went from a 130-point loss to end the day down just 4 points as concerns eased about the global economy and protests in Hong Kong.

Stocks surged at the opening bell following news the labor market rebounded sharply in September as employers added 248,000 jobs, the second-largest gain for any month this year.

Average US 30-Year Mortgage Rate at 4.19 Percent. Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year loan slipped to 4.19 percent from 4.20 percent last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, was unchanged at 3.36 percent.

The 30-year rate is down from 4.53 percent at the start of the year. Rates have fallen even though the Federal Reserve has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end next month.

Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.41 percent at midday Thursday, down sharply from 2.57 percent a week earlier. The decline in the 30-year rate comes after sales of existing homes fell in August. Investors retreated from real estate and first-time buyers remained scarce, according to a report last week from NAR. And fewer Americans signed contracts to buy homes in August, suggesting that sluggish sales could continue. The NAR said Monday, that its seasonally adjusted pending home sales index fell 1 percent.

The average rate on a five-year adjustable-rate mortgage fell to 3.06 percent from 3.08 percent. The fee rose to 0.5 point from 0.4 point a week ago. For a one-year ARM, theaverage rate dipped to 2.42 percent from 2.43 percent. The fee held at 0.4 point.

The 10 year treasury bond yield ended the week at 2.45% down from 2.54% last week.